The historiography of the first decade following Iran’s 1979 revolution is dominated by the political rivalries and the war efforts at the top of the state. It is paramount, however, to complement this top-down view with histories that provide bottom-up perspectives on the social, political and economic transformations of the 1980s. This paper brings both perspectives together by looking at the relations between labour and state in the context of the Iranian oil industry. On the one hand, it argues that oil workers continued to mobilize after the fall of the monarchy, demanding not only better working conditions, but also direct participation in the management of the oil industry through their showras (councils). These demands were not only articulated within a socialist discourse, but also within an Islamist discourse. On the other hand, these demands and the showras were increasingly confronted by the post-revolutionary state as it tried to consolidate its power through mechanisms of repression and incorporation. By using archival documents, newspapers, the oil industry’s journals and oral history, this paper explores the changes in oil workers’ living conditions and demonstrates the endurance of their social and political mobilisation. Particular attention is given to the different discursive ways in which oil workers articulated their interests and imagined a post-revolutionary state. This leads to the demystification of the post-revolutionary state. It was neither the outcome of “Islam”, nor of the “oil curse”, but a contingent outcome of political contestation. The mechanisms through which the state consolidated its power can’t be reduced to repression; it also created social mobility, material benefits, ideological influence, symbols and discourses that incorporated parts of the aspirations of the subaltern classes. This contradictory process was reflected in the fate of the showras that lost their independence while being institutionalised through a new Labour Law.